Tuesday, June 18, 2024

In meeting with Dutch queen, digital banks vow to improve PH ‘financial health’

The Digital Bank Association of the Philippines (DiBA PH) reiterated this commitment during a roundtable discussion with Queen Máxima of the Netherlands, who is the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), and the Bangko Sentral ng Pilipinas (BSP).

The roundtable, hosted by DiBA PH and Maya, was organized as part of Queen Máxima’s visit to the Philippines in her UN capacity. It aimed to bring together the six digital banks and the BSP to explore avenues for collaboration in advancing financial health initiatives and metrics.

Angelo Madrid, president of DiBA PH and Maya Bank, said: “Millions of Filipinos now own a financial account thanks to e-wallets. The next big challenge is here, and in less than two years of operations, safe and reliable digital banking is proving that we can help Filipinos use their financial accounts to improve their financial health. We are committed to providing better experiences, safety, and privacy through digital technologies.”

According to the UNSGSA Financial Health Working Group, financial health refers to the extent to which a person or family can smoothly manage their current financial obligations, has the capacity to absorb financial shocks, is on track to reach future goals, and has confidence in their financial future.

Madrid further emphasized: “Enhancing the financial health of our customers is intrinsic to digital banking, and we are dedicated to advancing this agenda. In the short term, we support conducting a national survey and developing complementary internal metrics to measure our impact on the financial health of our customers. Beyond that, we continue to deliver groundbreaking innovations that empower Filipinos to make bolder financial choices.”

Key leaders from the digital banking industry attended the roundtable, including Madrid, GoTyme Bank president and co-CEO Nathaniel Clarke, GoTyme Bank co-CEO Albert Tinio, Overseas Filipino Bank officer-in-charge Reo Andarino, Tonik Digital Bank vice chairperson Ma. Lourdes “Long” Pineda, UnionDigital Bank president and CEO Henry Aguda, and UNO Digital Bank president and founder Manish Bhai.

Also present were representatives from UNSGSA Queen Máxima’s Reference Group, including World Bank, Better Than Cash Alliance (BTCA), Alliance for Financial Inclusion (AFI), and Consultative Group to Assist the Poor (CGAP). Co-leading the discussion was deputy governor Bernadette Romulo-Puyat of the BSP. 

DiBA PH’s commitment comes at a time when the Philippines is making great strides towards financial inclusion. According to the BSP’s 2021 Financial Inclusion Survey, the number of adults with a financial account grew from 29% in 2019 to 56% in 2021, thanks to the rising adoption of e-wallets. 

Despite this progress, the same survey showed that only 4% of adults borrow from banks, and 52% keep their savings at home. Additionally, 41% of Filipino adults said they could not fully meet living expenses and 46% said their current finances would not last through emergencies.

In response, digital banks have rolled out services and products that enable Filipinos to form healthier savings habits. Digital bank customers earn higher interest rates on deposits, driving them to save. Users are also motivated to open goals-based deposit accounts that allow them to start small and build their savings over time.

The digital banking sector grew its depositor base by 26% at the end of December 2023, compared to a 4% increase in the overall banking system during the same period.

Digital banks have also significantly expanded credit access by pioneering alternative credit scoring models and rolling out responsive and responsible credit offerings.

Despite infrastructural challenges such as the rollout of the national ID system and a more robust credit bureau, the total loan portfolio increased to nearly Php25 billion from 2022 to 2023.

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